These may not be ideal times for the U.S. commercial insurance industry. Sure, that is stating the obvious as COVID-19 business interruption claims encounter denials of cover, and now civil unrest damage claims overlay the undercurrent of BI disappointment. It is hard to imagine that the trillion-dollar Covid-19 issue can be significantly affected by a billion-dollar […]
image The insurance industry is in large part past the hysteria of disruption, innovation and entrants solving the issues of the insurance world, and is moving into the stage of implementation, collaboration and iteration. Startups that have gained traction are now broadening their markets, and in some cases, their offerings. And, the industry is recognizing […]
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You don’t have to look very far to find an active insurance ecosystem- just visit the neighborhood insurance agent or contact a commercial broker. They have been fostering the ecosystem method of serving customers since before the term was moved into the front row at the innovation and InsurTech get-together.
TLDR. Read any of the volume of current discussion regarding insurance ecosystems and you’ll find references to smart device apps, on-demand, shopping or ride sharing companies that are adding insurance options (Paytm and LIC, Amazon and Acko, Flipkart and Digit) but these are not surprisingly in insurance markets that are developing through a ‘digital native’ business culture. Ecosystems per se have been a difficult ground up start in more developed insurance markets, e.g., U.S., Canada, and Europe. But what of the US and Europe- forget being part of an ecosystem?
A quick look at defining an insurance ecosystem finds:
Ecosystem- “An ecosystem is a new business paradigm in which firms use digital tools to leap over traditional industry boundaries or forge partnerships.” (WHY ECOSYSTEMS ARE THE FUTURE OF INSURANCE, Accenture).
Huh. Leap over traditional industry boundaries or forge partnerships.
“we suggest that middle-market insurers may want to consider expanding their horizon well beyond the standard product and service options they typically offer policyholders (see figure 2). This would involve creating or joining a much broader ecosystem offering a wider range of business support solutions, as well as facilitating educational and networking opportunities for customers.” (Building new ecosystems in middle-market insurance, Deloitte)
Hmmm. Offering a wider range of business support solutions, as well as facilitating educational and networking opportunities for customers.
I suggest if we look past the urge to see ecosystems as a new paradigm in developed insurance markets you will find- the agency model. Not just the independent or captive agents who are churn and burn lead chasers, but the agents who have a holistic approach to building relationships (old school suggestion of recognizing inter-connectivity of business- nascent ecosystems.)
Digital ecosystems such as are noted above typically didn’t begin as systems; they were applications. WeChat was launched in 2011 as a mobile chat app by China digital giant, Tencent. Within four years it had developed by the popular demand of users and affiliate companies into being a 200 million users per month- wait for it- ecosystem of users and providers. The application was adding value to what was originally a form of communication. It was accessible, easy to use, had features that were meaningful in daily life. It’s said that WeChat was the impetus behind the explosive growth in use of QR codes in China.
How does that tie into insurance, or insurance ecosystems?
There are tens of thousands of insurance agents in the U.S. alone, each of whom is working to build business, retain customers, increase the actual or perceived value customers find in the agent’s service, in other words- working to sell a reason for the customers to interact with the agency more often than once per year.
Smart agents have figured ways to do this for years before digitization- sponsor little league, be active in the chamber of commerce, bring a dish to pass at the service organization luncheon, donate bicycles to good readers at school (Chris Paradiso !), names on bowling shirts, filling sandbags, holding a customer’s hand when a claim occurs, referring the accountant next door, keeping a bank account in the local 1st National, keeping abreast of business and tech changes, and so on. Building the value he/she could bring to customers, being a resource.
How is it that agents can be the insurance ecosystems of today? If in China- have your QR code on WeChat, of course. Piggyback on the platform Tencent has constructed. But in mature markets where the insurance industry has tenure, the model has it’s own reference- ‘legacy’- and the availability of carriers is a fractured confusion to customers?
Active agents have the basis- relationships with collaborative businesses/organizations, and a pool of mostly content customers. How might the agent leverage these resources?
- What does an agent’s website say when it’s opened? Chances are it says, “I want to sell you something.” So, people visit the site when they need to buy insurance. Why not have a splash page that showcases the value/connections/resources that the agent has built over time? A site that is a resource pool for clients that also serves as a selling tool when needed. (not like that of the Life Insurance Corporation of India– love their resources but the splash page is crazy busy).
- Collaborate with business partners- what’s wrong with having synchronization of messages within the respective websites? If the agent resides in a smaller community then resources are common, success of one results in success of another, and there’s that synergy thing to take benefit from.
- Be an active part of social media that makes sense for business. Not just a ‘like’ clicker, but a question asker, expertise sharer (Billy Van Jura )
- Don’t try to re-create the wheel- link to existing resources customers are familiar with. Have an FAQ link on your site? Did you know that Pinterest has an insurance info page? The details aren’t too tough to get a link onto your page, and cross-clicks builds your digital presence.
- Be an easy source of information/links for emergency, weather, and government contacts. Be the source customers want to keep as a favorite.
- Build a smart device application that makes sense- not a selling tool but a resource for the user that can also serve as a selling tool.
- Leverage the digital resources your stable of carriers has- they know that being a digital resource is important; some are better at it than others.
- There’s a lot more that the reader can think of- convert your analog ecosystem into a digital version.
There are agents who are working to perfect targeted ecosystem plays, e.g., cyber insurance (Brett Fulmer, Joe Hollier, Ben Guttman in the US), or in unique SME plans (Michael Porpora ), or in facilitating service tools for high net worth customers (Kurt Thoennessen). A very good example of building an ecosystem/resource platform is Pat West whose firm, Hedgequote’s primary function is to be a resource for those needing information on insurance and potential firms from which to purchase.
I regret I do not know many agents working outside of the US, but some good examples who are building services beyond the basic sales model include Muhammad Ayodeji working in Lagos, Nigeria, (who in addition to representing insurance well posts traffic and accident updates through Twitter), or Mark Callanan in Sydney, Aus, who investigates crop and parametric options for the farmers and farm landowners in the country. And one never knows- the transition that German insurer DFV-AG has forged from being a more traditional carrier to digital expert may lead the firm into digital ecosystem land.
The point is that ecosystems can be insurance businesses that truly offer a wider range of business support solutions, as well as facilitating educational and networking opportunities for customers. Perhaps a clever player will build an ecosystem of business connections that is a digital repository of business links. Ecosystem is still be defined- agents can evolve beyond the world of sales quotas and discussions about premiums.
“Alexa, who does my insurance agent recommend for plumbing repairs?”
Patrick Kelahan is a CX, engineering & insurance professional, working with Insurers, Attorneys & Owners. He also serves the insurance and Fintech world as the ‘Insurance Elephant’.
I have no positions or commercial relationships with the companies or people mentioned. I am not receiving compensation for this post.
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